BOSTON ( TheStreet) -- Often mistaken as an entrepreneurial wasteland, the American Midwest is surging ahead in fresh-water research, one of the most important commodities in the next two decades, and emerging as a powerhouse in life sciences, where advancements traditionally have been considered the bailiwick of Boston and San Francisco. The University of Wisconsin in Madison last month said a team of scientists have grown multiple types of retinal cells from iPS cells. The scientists picked up from life-sciences work conducted on the east and west coasts at the University of California as well as Harvard University and the Massachusetts Institute of Technology. Scientific entrepreneurs at landlocked schools tend not to make business connections as well as Harvard and MIT. There were 18 biotechnology venture-capital deals in New England during the second quarter as opposed to eight in the Midwest. To help with horn-tooting efforts, there are groups like the Wisconsin Angel Network, which encourages the world to notice startups in the Badger State. "Midwestern entrepreneurs don't shout enough about their successes, so we shout for them," says Joe Kremer, director of the Wisconsin Angel Network. The Midwest has an edge in some areas. "We have 20% of the world's surface fresh water," says Teresa Esser, managing director of Silicon Pastures, a group of angel investors who fund startups in the Great Lakes region of the U.S. That makes the area ripe for research and development on the critical resource, whose demand is growing in emerging markets. Meat-based diets, becoming more popular in countries including India, require twice the water relative to vegetarianism. And energy production also requires water.
Some of the biggest players in water are General Electric ( GE), Danaher ( DHR) and Ametek ( AME). There's an exchange traded fund that focuses on water: PowerShares Water Resources ( PHO). The ETF has increased 20% this year, almost double the 12% gain of PowerShares' S&P 500 ETF. There are 120 water-related companies in Wisconsin alone, including water-meter maker Badger Meter ( BMI) and water-heater maker A.O. Smith ( AOS). Silicon Pastures was an early investor in Milwaukee water-sensor startup Aqua Sensors, which was bought by Thermo Fisher Scientific ( TMO) last year. To that end, the University of Wisconsin in Milwaukee this year established the School of Freshwater Sciences, the only graduate school in the nation dedicated solely to the study of fresh water. The school has partnered with the Milwaukee 7 Water Council, which aims to make Greater Milwaukee the global hub of fresh-water research and development. "There are many more entrepreneurs in the Midwest than the coast gives us credit for," says Steve Einhorn, general partner at Capital Midwest Fund, a VC firm in Milwaukee that focuses largely on medical startups. Most venture-capital investors work on either coast. In the second quarter, the Midwest saw only 5.5% of the nation's venture deals, compared with Silicon Valley's 32% and New England's 13%, according to Thomson Reuters ( TRI). Heartlanders tend to be more humble, in contrast to the aggro culture of VC. "Aw shucks" isn't likely to fly in a pitch meeting. "There's a definite cultural bias toward being low-key and maintaining a low profile," Esser says. To wit: Milwaukee's biggest employer, Northwestern Mutual, is known as "The Quiet Company" because of its lack of advertising and publicity.
"The Midwest tends to be very modest," Einhorn says. "We don't go for publicity. We don't boast. It's just steady, honest, diligent work. We have nice, cold winters that are conducive to hard work." -- Reported by Carmen Nobel in Boston.